Mike “Mish” Shedlock's
Sitka Pacific Capital Management,Llc
After an allegedly strong January jobs report and a Powell speech, let's look at rate hike expectations now vs a month ago.
I created the above graph in Excel manually typing in numbers as there is no data download from CME FedWatch.
Target rate probabilities for December 2023
Weighed average example December 2023
Now vs a month ago
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The market now sees a terminal rate of 5.36 percent in September, call it 5.25-5.50 percent.
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A month ago the market thought the terminal rate was 5.00 percent in June.
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Previously, the market expected a peak in June followed by two or three 25-basis point cuts all the way to 4.32 percent.
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The market now sees a a cut from 5.36 percent to 5.0 percent.
The market has gotten the Fed's message higher rates for a longer period of time.
However, the market is still expecting a bit more than one 25-basis point cut in December.
Unemployment rate hits new low of 3.4 percent as jobs and employment jumps but
It was an allegedly strong jobs report that triggered belief in the Fed's stance of higher for longer.
This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.
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